Markup is what estimators add; margin is what owners keep. Cost $10,000, markup 25%, price $12,500. The $2,500 is 25% of the cost and 20% of the price, so the same job has a 25% markup and a 20% gross margin. Contractors who quote "20%" without saying which one they mean are, more often than not, earning the smaller number.
A worked number
To achieve a 30% gross margin, the markup is 30 divided by 70, or 42.9%. A contractor who marks up 30% instead gets a 23% margin, seven points short, on every job all year. On $560,000 of revenue that's about $39,000 that was priced away before the first receipt.
The mistake it hides
Marking up to cover overhead and calling the result profit. Markup has to recover the overhead rate first; what's left after overhead is net profit. At a 20% overhead rate, a 25% markup leaves roughly zero net. The markup vs. margin guide has the conversion table and the reason the achieved margin is usually lower than the bid margin.
In Obra
Obra records what the job was sold for and what it cost, so the achieved margin per job is visible next to the one you bid. The markup to margin calculator converts in both directions, and the change order pricing calculator applies the job's markup to extras.